Kansas legislators are seeking approval for key Medicaid system reforms the state will need to survive federal cuts over the next five years and streamline their program.

Through the application submitted to the Centers for Medicare and Medicaid Services (CMS), the state seeks support for the new Kansas-based health care system, KanCare, to be implemented in 2013.

The revisions to the state’s Section 1115 demonstration waiver application include the second facet of a two-track process which requests further federal funding to address needs for Kansas’ large aging population, according to Republican Lt. Gov. Jeff Colyer, M.D.

“Part of the issue of Medicaid in Kansas is it is a program that has grown up over 45 years and was not patient-friendly, did not save money for the state, was very expensive, and did not promote good health programs,” said Colyer. “Medicaid was scattered over four different cabinet agencies, so it was very confusing to people and we didn’t have a common budget. If you tried to save money in one department it might drive up money in another.… It wasn’t very responsive, and it was a program that was in disarray.”

Restructuring Medicaid

Kansas’ health care costs have been rising, primarily due to care for the elderly. The state currently has the highest rate of people in nursing homes in the United States. Colyer says home care has been only a temporary solution.

“Under the current system, the structure of Medicaid, preventive care didn’t make sense, so there were a lot of people who had good ideas but the payoff wasn’t for four or five years,” Colyer said. “We saved money on home care, but we drove up costs somewhere else.”

According to Dave Trabert, president of the Kansas Policy Institute, looking at long-term adaptations to health care that will result in a more cost-effective manner “has been the driving force behind everything Gov. [Sam] Brownback has tried to do.”

Colyer said the governor’s proposal for a long-haul reform is more comprehensive and will potentially avoid across-the-board rate cuts.

“We have all of these perverse systems going on,” Colyer said. “So what we have done is we had to first off restructure all of our programs so the patient’s interest, the state’s interest, and the Medicaid interest are all going in the same direction, so we have an integrated care model.”

KanCare’s integrated setup could potentially save the state an estimated $838 million in the next five years while maintaining patient services.

“The federal government has forced Kansas into growing its Medicaid program in ways that don’t make sense and don’t get health outcomes,” Colyer said. “Most states made across the board cuts. Many other states have thrown hundreds of thousands of people off Medicaid. Neither of those solutions was resulting in better health care for their state.”

Taking Federal Strings Off

Colyer says the state wants to work out a block-grant system that removes federal strings and sets reasonable, achievable outcomes for health care debt reduction over the next five years.

“What we’re trying to do is create a system where we’re going to be paying for health outcomes and then let the local Kansas providers sort out how we can deal with this problem,” Colyer said. “That is very different from what Washington is used to doing.… Let Kansans make decisions about how to do that.”

Trabert says a recent study showed Medicaid will consume 31 percent of General Fund revenues in Kansas by 2023 under ObamaCare, but only 23 percent if a state-based health system is implemented.

“If the goal is to have health care more accessible and to get people covered, then the federal government should understand that every state has a different situation and they should just let them do it,” Trabert said. “When they try to dictate how something gets done, it seems they’re more concerned about the process than the end result.We know that we cannot continue to do things the way the federal government wants them done or the way we’re currently doing things without devastating impact.”